[dangus]

My least favorite part of the article was where the author complained about the “financial mistake” of the car, about how they were underwater on their car loan.

Depreciation is a normal and expected part of buying a car. If you are financing a car you should be prepared to keep it for a long period of time. While many automakers offer car loans of 5+ years, ideally you should only finance a car for 3 or 4 years and/or put more money down to ensure you are never underwater.

At no point did the author say that the car didn’t do its job as a reliable piece of transportation, but somehow it was a “financial mistake.”

The fact that cars depreciate and cost too much is a feature of all cars.

[ajross]

> Depreciation is a normal and expected part of buying a car

The problem is that Tesla owners are spoiled. I bought my Model Y just before the supply crunch in June of 2021, and within a year used models were selling for 20% more than I paid. They've since come down a ton as demand levelled off, but even now my car has depreciated only about 18% (including inflation!) from the cost of a brand new Y with the same configuration.

It's easy enough to imagine a young Tesla buyer over the last few years getting a very weird picture of the financials of owning a car.

[dangus]

On top of that, this phenomenon applies to anyone who bought a car in 2021.

[giobox]

Most car manufacturers take some efforts to try and ensure residuals stay reasonable, otherwise customers will be less keen to repeat buy for obvious reasons. Setting prices correctly at launch is key for this.

What Tesla did, which historically is not a "normal and expected part of buying a car", is repeatedly slash list pricing after launch, thus meaning the used market does not trust valuing them, as so many used car dealers got very badly burned on inventory they paid too high a price for when the new car prices came down, putting them all underwater.

These aren't small or predictable market moves either; they are random swings. The Model S and Model X have been reduced new by as much as 24% at times. This Simply Does Not Happen at most car companies, most of the time, and residuals are more stable as a result.

Imagine you had just taken stock of a used model S, valuing it based on purchase price "n", then tomorrow the manufacturer slashes the price of a new one by 24%. That's very, very hard not to end up underwater.

Similarly, for existing owners - that 24% cut has just shifted the depreciation curve massively, and not in your favor. Existing owners frankly have every right to be pissed.

[ethbr1]

+ Technology additions in early models

+ Parts availability woes

In short, buying a Tesla is a terrible decision from a financial perspective.

Maybe from a fun or cool perspective!

But if you're interested in maintaining $-value-over-time, there are much better options (Corollas, Accords, Tacomas, Subarus, etc).

[giobox]

The flip side of all this is a used Tesla can be a really great option right now for some folks - bulk of depreciation is over, maintenance/running costs are some of the lowest in the industry (ignoring EV insurance costs I guess, but thats another topic...). The traction battery/motors/drivetrains regularly get to 300k miles. I'd have no problem at all recommending a used 3/Y at the right price to someone if EV fits their lifestyle etc.

[dangus]

> Most car manufacturers take some efforts to try and ensure residuals stay reasonable

lol, walk me through the process at Maserati.

[giobox]

Probably why I used the word "most" here. Residuals matter, even to the manufacturer.

If residuals plummet too much, their lease accounting can go red too. Lease rates have to account for a future predicted value of the vehicle, and manufacturers strangely like making money on leases.

Also, the huge depreciation on a Maserati isn't a surprise, most of the time. A mass produced vehicle selling in the hundreds of thousands annually seeing double digit list price shifts at random did come as a surprise, and has put car dealers underwater on Tesla inventory before.

[dangus]

Would an example of putting in effort to maintain residuals be providing software updates and infotainment system hardware upgrades to owners?

Because those are two things that Tesla is doing that nobody else is doing at all or very well.

https://www.tesla.com/support/infotainment